Illicit flows tend to take stronger root in countries experiencing non-inclusive growth. Not only do illicit flows exacerbate income inequality, they also undermine a nation’s fiscal capacity, the degree to which the government can credibly enact revenue, expenditure, and monetary policies to achieve socially desirable outcomes. As a result, nations find it more difficult to stem, if not reverse, the vicious cycle of illicit financial flows and inequality.

Illicit flows also represent a major drain on the resources of African countries. Global Financial Integrity carried out a joint study with the African Development Bank and found that Africa was a net creditor to the world to the tune of up to $1.4 trillion over the period from 1980 through 2009, with the most conservative estimate of the capital loss being around $600 billion. Thus, despite the inflow of international aid into every region of Sub-Saharan Africa, outflows of illicit capital continue to result in a net loss of resources that overwhelms any salutary economic effects of recorded capital inflows.